A simple business plan template to follow is to develop a “sniff test.” Hold up the fish (project) – if it doesn’t smell right, throw it away. This is simply a short-hand way to tell if a project is worth a more detailed look.
Businesses are regularly presented with new opportunities. These can require a considerable amount of time and resources to evaluate. Often, they do not pan out, leaving you with the wasted time that could have been better spent on productive projects. A simple business plan template to follow is to develop a “sniff test.”
Here is a very simple test with two easily identified components.
- Tell me About Demand.
There are always great ideas: innovative, sexy things that seem like they would just have to make money. Frequently, these ideas are couched in terms of a product or service that sounds great. That is supply. It does not matter if you can create a great product; what matters is whether someone will buy it. It is always, always about demand. Without it, the best product in the world is a dud.
- Paint Me A Story.
For a project to make sense, there must be a compelling story behind it. It needs to very clearly link why customers would want your product/service and how you can provide that item at a price and cost that would make you money. The notion is to be able to explain a logical journey that links supply and demand. Is the product viable? Can it be supplied at a cost and quantity that makes sense? Can you price it to make money? Who would want the product? What is the size of that market? Will they pay the price needed to make a profit? Most entrepreneurs can take the trip based on experience and intuition.
Each entrepreneur must evaluate their business and market environment to develop their own unique test to quickly weed out the losers.
Remember, there is always an opportunity cost, if you spend time on evaluating this project, there is something else you have not done that could have made you money. If you head down too many rabbit holes along the way, you will fail. Don’t forget – it is always about making money. No investor really wants to hear about your great idea. If they are investing their money, they want to know how they are getting it back and what their return will be. Following a simple business plan template like the “sniff test” can save you a lot of wasted effort and resources.